Tesla expands insurance beyond California for the first time, using only drivers' safety scores to price premiums

·2 min read
Left, a Tesla Model S Plaid. Right, Tesla CEO Elon Musk
Tesla CEO Elon Musk said he hopes to offer the new insurance product in "most of the country" next year. Tesla/Hannibal Hanschke Pool/Getty
  • Tesla has expanded its car insurance beyond California for the first time, now offered in Texas.

  • But its pricing model looks much different than before, with premiums based solely on "safety scores."

  • The AI "grading" system calculates how well you drive based on five factors, like hard braking.

Tesla now offers car insurance in Texas, but its pricing model looks entirely different from its California counterpart - and any other insurance plan.

That's because the premiums are solely based on Tesla's recently launched "safety score" beta, an artificial intelligence grading system that scores drivers based on five factors: forward-collision warnings, hard braking, aggressive turning, unsafe following, and forced autopilot disengagement.

At the end of each day, Tesla owners can view their daily safety score - a number ranked from zero to a perfect score of 100.

Tesla CEO Elon Musk said basing insurance costs on "your actual driving history" is the "right way to do it," at the company's annual shareholder meeting last week.

Unlike traditional insurance pricing, variables such as credit, age, gender, marital status, and accident history are not included in Tesla's new insurance offering, the company website says.

"We're going to be upgrading the version in California because we want to have the same kind of real-time insurance," he said. "Hopefully, we'll probably have most of the country next year - aspirationally, that's our goal."

Musk said car insurance is a "regulatory labyrinth" due to the different rules and applications required by various states.

Some Tesla drivers have documented their experience with the new scoring system on social media. One user posted incremental changes in his score, claiming that "running yellow lights" and "rolling through stop signs" helped increase his rating. Insider has not confirmed these claims.

The new insurance offering is available for Tesla Model S, Model 3, Model X, and Model Y owners in Texas. Tesla said it expects the formula to change in the future as it gains more customer and data insights.

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